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	England and Wales High Court (Senior Courts Costs Office) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Senior Courts Costs Office) Decisions >> Forward & Ors v Burton [2005] EWHC 90004 (Costs) (24 May 2005) URL: http://www.bailii.org/ew/cases/EWHC/Costs/2005/90004.html Cite as: [2005] EWHC 90004 (Costs)

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IN THE HIGH COURT OF JUSTICE
SUPREME COURT COSTS OFFICE
FROM THE MAYORS & CITY OF LONDON COUNTY COURT

		Clifford's Inn Fetter Lane London EC4A 1DQ
		24 May 2005

Master Wright

1. This is an appeal from a detailed assessment conducted by Costs Officer Mr Emery on 5 January 2005. The appeal is by way of rehearing (see CPR 47.23 and CPD 48.2).
2. In his Appellant's Notice the Defendant, Mr Burton (to whom I shall refer as "the Appellant"), appeals against:

(1) The award to the Claimants of the costs of preparing and approving the bill of costs; and

(2) No order being made for the costs of the Part 8 and detailed assessment proceedings.

3. The Appellant seeks a variation of these awards by the substitution of the following orders:

(1) That the Claimants' bill be assessed in the sum of £4,256.92; and

(2) The Claimants do pay the Appellant's costs of the Part 8 and detailed assessment proceedings to be assessed if not agreed.

4. The Appellant also seeks an order that the Claimants do pay the Defendant's costs of this appeal to be summarily assessed.
5. On 1 November 2000 the Claimants sustained personal injuries and other related losses as a result of an accident caused by the negligence of the Appellant.
6. In October 2002 the Appellant settled the Claimants' claims (without proceedings being issued) for the total sum of £3,750.
7. The only matter then outstanding was the Claimants' costs which the parties had been unable to agree.
8. On 10 December 2002 the Claimants' solicitors Lucas & Co wrote to the Appellant's insurers Churchill Insurance Co Ltd ("Churchill") a letter marked "without prejudice" enclosing a schedule of costs which totalled £6,678.30.
9. Churchill replied on 6 January 2003 saying that they had passed their file of papers to Pinnacle Costing Services ("Pinnacle") whom they had instructed as their agent to negotiate settlement of the Claimants' costs direct.
10. On 14 January 2003 Pinnacle wrote to Lucas & Co asking for confirmation of the total costs and other matters.
11. On 15 January 2003 Lucas & Co wrote to Pinnacle confirming that the total costs sought was £6,678.30 in respect of the costs of the Claimants Mrs Teresa Forward, Miss Alice Forward and Miss Chantelle Forward. These were the first three Claimants, the fourth Claimant having no entitlement to costs. They asked for offers to be made.
12. On 20 January 2003 Pinnacle wrote to Lucas & Co saying:

"Having considered our clients file of papers, we are prepared to offer £4,250 in settlement of your profit charges, VAT and disbursements incurred in representing all Claimants for whom you have acted herein. This offer is made pursuant to the provisions of CPR 47(19)."

13. On 21 January 2003 Lucas & Co wrote to Pinnacle:

"As you already know, our Schedule of Costs is in respect of three Claimants, thus we feel your offer is unreasonable.

However, in the spirit of compromise and to settle matters amicably, we are prepared to agree a global figure of £5,720.

The offer is made pursuant to Part 47.19 of the CPR."

14. On 23 January 2003 Pinnacle wrote to Lucas & Co:

"With economics in mind we will make a final offer of £4,750 to include VAT and disbursements in settlement of your charges in representing all Claimants for whom you have acted herein. This offer is made pursuant to CPR 47.19.

In the event that our offer is not acceptable, please confirm that you will not litigate without first letting us have sight of your clients' formal bill for assessment."

15. On 27 January 2003 Lucas & Co wrote to Pinnacle:

"If it will facilitate settlement we confirm we will be prepared to split the difference between us and agree a global figure of £5,235.

Please note that the above figure is put forward as a Part 47.19 offer and will be brought to the attention of the court should the matter proceed to detailed assessment."

16. Pinnacle replied on the same day increasing their offer to £4,875 "to dispose of the matter".
17. On 28 January 2003 Lucas & Co replied that this offer was not acceptable and said:

"We will now issue Part 8 proceedings and thereafter serve our formal bill on nominated solicitors. You already have our Part 47.19 offer."

18. The Appellant was thereafter represented by DLA solicitors. On 26 February 2003 they wrote to Lucas & Co:

"We confirm that we are content to remain with the existing Part 47.19 offer in the fully inclusive sum of £4,875 made by Pinnacle Costing Services under cover of their letter dated 23 January 2003.

If this offer is not acceptable to yourselves, then your clients should issue Part 8 proceedings. We confirm that we are instructed to accept service of such proceedings."

19. It appears that nothing further was heard by the Appellant's solicitors until (on 5 June 2003) Lucas & Co served a Part 8 claim which they had issued on 9 May 2003 seeking an Order under CPR 44.12A that:

"(1) The Defendant do pay the Claimants' costs of the claims relating to the accident on 1 November 2000 to be assessed on the standard basis if not agreed.

(2) The costs of this application are costs in the assessment."

20. On 15 September 2004 an Order was made in the Mayors & City of London County Court (amending under the slip rule an earlier order made on 16 July 2003) which provided that:

"1. The Defendant do pay the reasonable costs of Mrs Teresa Forward, Miss Alison Forward and Miss Chantelle Forward in respect of pursuing a claim for damages arising from a road traffic accident on 1 November, to be subject to detailed assessment if not agreed.

2. The costs of the Part 8 claim be in the detailed assessment."

21. On 9 September 2004 Lucas & Co had served a Notice of Commencement of assessment of bill of costs together with the Claimants' bill.
22. The detailed assessment of the bill was carried out by Costs Officer Mr Emery on 5 January 2005. There is an attendance note of that hearing (which was included in the appeal bundle) in which it is stated:

"Delay

Mr Carter mentioned that the point of delay had been raised with the Claimant prior to the hearing. Mr Carter noted that the front of the bill of costs was wrong and the date of the order should be 2003 and not 2004 which meant there was a year's delay in the Notice of Commencement being served. This was acknowledged by the Claimant and he offered to forgo the interest for the delay period. The Costs Officer considered this a sensible outcome and suggested to make things easier the parties agree to a deduction of one year's interest. Mr Carter asked that the bill of costs be endorsed to that effect."

23. After relating the decisions taken in items 1-30 of the bill the note continues:

"Costs to item 30

At this point in the detailed assessment it was agreed that the costs agreed/assessed totalled £4,256.92.

Mr Carter confirmed that after the service of a schedule by the Claimant two Part 47.19 offers had been made by the Claimant and noted that both were more than the total of the bill of costs.

The Claimant objected stating that items 31 and 32 [the costs of preparing and checking the bill] had to be considered and that as claimed (£763.75) these would take the total of the costs over the offer figures.

There was then a debate as to whether the cost of preparing and approving the bill of costs should be allowed. Mr Carter argued that as the offers were made prior to the bill of costs being prepared the costs relating to the bill preparation should not be taken into account.

The Claimant stated that the bill of costs had to be prepared in any event and in fact work had also been commenced on the Part 8 proceedings.

Mr Carter submitted that such a submission was a matter of fact and invited the Claimant to confirm when the law costs draftsman was instructed and when the work on the Part 8 was commenced, having noted that the same was not issued until 9.5.03 and served on 5.6.03. The Claimant passed the correspondence file to the Costs Officer and although not able to prove what was asked by Mr Carter, tried to infer that the file supported the Claimant's contention that as the Defendant had invited the Claimant to proceed to Part 8 proceedings, the work would have been undertaken.

Mr Carter stated that in 99.9% of cases costs are agreed on the basis of a brief breakdown and it is only a very small number of matters which make an assessment hearing.

The Costs Officer however agreed with the Claimant's submission that in order to consider the offer made by the Defendant a detailed bill of costs needed to be settled.

Mr Carter pointed out that the Claimant had prepared a schedule of costs which they sought to rely upon and were willing to negotiate with. In fact Part 47.19 offers had been made by the Claimant also, based on the schedule so there was no difficulty in relying on the breakdown submitted. It was stated that had the Claimant accepted what had now been found to be a good offer, the costs of preparing the bill of costs need not have been necessary and indeed the costs of Part 8 proceedings and detailed assessment.

The Costs Officer however would not be persuaded to change his mind and said that he always allows in instances such as this for the preparation of the bill of costs."

24. The note goes on to say that items 31 and 32 of the bill (preparing and checking the bill) were assessed (after hourly rate adjustments) at £519.94 making the new total for the bill of costs £4,776.86.
25. The note goes on:

"At this point Mr Carter confirmed that the offer made on 24.1.03 was for £4,750 and the second for £4,875 on 27.1.03 (the fax mistakenly noted as 23 January). Accordingly Mr Carter stated that the second offer was still a successful offer and applied for the Defendant's costs of the Part 8 and detailed assessment proceedings.

The Claimant submitted that, in accordance with paragraph 4.18 of the Practice Direction it was recognised that preparing and checking a bill of costs is now part of the costs of conducting litigation and therefore those costs should not be separated from the costs of the main action. The Claimant also submitted that where a detailed bill had been drawn up any previous without prejudice schedule relating to the matter had to be disregarded.

The Costs Officer stated that he was not minded to allow either party their costs stating that this matter had been capable of agreement. The parties confirmed that no further offers or fruitful negotiations had taken place since January 2003. The Costs Officer commented that negotiations should have taken place and an assessment avoided."

26. As appears from paragraph 2 above the Appellant makes no complaint about assessment of items 1 to 30 of the bill. The appeal is in respect of the costs of preparing and approving the bill and the costs of the detailed assessment proceedings.
27. At the hearing of the appeal the Appellant's counsel Mr Marven submitted that the Claimants had failed to beat either of the Appellant's offers of 23 January 2003 (£4,750) or 27 January 2003 (£4,875). These had been made long before costs only proceedings had been commenced or the Notice of Commencement and bill had been served.
28. He submitted that in these circumstances the Appellant ought to be awarded his costs of the costs-only proceedings under the general principles set out in CPR 47.18 and 47.19 and paragraph 46 of the Costs Practice Direction. He referred me to paragraph 35 of the judgment of Brooke LJ in Crosbie v Munroe [2003] 1 WLR 2033, 2041. Furthermore he submitted that the Claimants should not be entitled to their costs for preparing and checking the bill.
29. CPR 47.18 states:

"(1) The receiving party is entitled to his costs of the detailed assessment proceedings except where –

(a) the provisions of any Act, any of these Rules or any relevant Practice Direction provide otherwise; or

(b) the court makes some other order in relation to all or part of the costs of the detailed assessment proceedings.

(2) In deciding whether to make some other order, the court must have regard to all the circumstances, including –

(a) the conduct of the parties;

(b) the amount, if any, by which the bill of costs has been reduced; and

(c) whether it was reasonable for a party to claim the costs of a particular item or to dispute that item."

30. CPR 47.19 states:

"(1) Where –

(a) a party (whether the paying party or the receiving party) makes a written offer to settle the costs of the proceedings which gave rise to the assessment proceedings; and

(b) the offer is expressed to be without prejudice save as to the costs of the detailed assessment proceedings, the court will take the offer into account in deciding who should pay the costs of those proceedings.

(2) The fact of the offer must not be communicated to the Costs Officer until the question of costs of the detailed assessment proceedings falls to be decided."

31. Section 46 of the Costs Practice Direction states (so far as is relevant):

"46.1 Rule 47.19 allows the court to take into account offers to settle, without prejudice save as to the costs of detailed assessment proceedings. The rule does not specify a time within which such an offer should be made. An offer made by the paying party should usually be made within 14 days after service of the Notice of Commencement on that party. If the offer is made by the receiving party, it should normally be made within 14 days after the service of points of dispute by the paying party. Offers made after these periods are likely to be given less weight by the court in deciding what order as to costs to make unless there is good reason for the offer not being made until the later time.

46.2 Where an offer to settle is made it should specify whether or not it is intended to be inclusive of the costs of preparation of the bill, interest and value added tax (VAT). The offer may include or exclude some or all of those items but the position must be made clear on the face of the offer so that the offeree is clear about the terms of the offer when it is being considered. Unless the offer states otherwise, the offer will be treated as being inclusive of all these items."

32. In paragraph 35 of his judgment in Crosbie v Munroe (see paragraph 28 above) Brooke LJ said:

"35. If the Costs Judge or District Judge considers that the receiving party ought to have accepted an offer made before the Part 8 proceedings commenced, then he is likely to conclude that the paying party should receive all his costs, including any costs involved in the subsequent Part 8 proceedings pursuant to rule 47.18(2). This consideration shows vividly that the substantive proceedings and the assessment proceedings are quite different, and that Mr McKeon's attempt to subdivide all the proceedings up to the making of the order for detailed assessment in costs-only proceedings is unsustainable."

33. Mr Babarinde (who appeared for the Claimants both at the appeal hearing and before the Costs Officer) referred to the letter written by Pinnacle on 23 January 2003 (see paragraph 14 above). He submitted that when Pinnacle asked for confirmation that the Claimants would not litigate without first letting them have sight of their formal bill, they were making it clear that they needed to see that bill before finalising negotiations.
34. He submitted that the Costs Officer had been right to include the costs of preparing and checking the bill in the assessment of the Claimants' costs. After assessment, the difference between the Appellant's offer of £4,850 and the costs as finally assessed (including items 31 and 32) was £98. In these circumstances the appropriate order was that there should be no order as to costs, as the Costs Officer had stated.
35. Furthermore he submitted that the Appellant had been under a duty to pursue the negotiations and make offers after the date of his final offer on 26 February 2003.
36. Mr Marven (in reply to Mr Babarinde's submissions) referred to the judgment of Waller J in Chrulew & Ors v Borm-Reid & Co [1992] 1 WLR 176. He said that this had been referred to in the correspondence between the parties. It was a judgment which related to the rules about taxation of costs under Order 62 rule 27(3) of the Rules of the Supreme Court. In that judgment Waller J said at page 185 E-F:

"The expectation at the conclusion of a taxation is that normally the party whose bill is being taxed will be entitled to his costs and there is not an expectation that the "winner" will receive an order for costs, ie that someone who succeeds in taxing the bill down will necessarily be entitled to his costs of attending the taxation. There may well be circumstances in which the failure to accept a Calderbank offer is so unreasonable that an order for costs will be made under Order 62 rule 27(2) in favour of the party who has successfully obtained a lowering of the bill as presented. But in circumstances such as the present, where the Calderbank offer has been beaten by only a very small amount, I do not think that the principle of King v Weston-Howell [1989] 1 WLR 579 as applied in litigation generally should apply to taxation proceedings."

37. He submitted that this decision was no longer binding because of the introduction of the Civil Procedure Rules and that decisions about costs were a matter of discretion depending upon the facts of each case. I agree.
38. In my judgment, the Costs Officer was wrong to conclude that the Claimants were entitled to recover their costs for preparing and checking the bill. The negotiations which took place (see paragraphs 8 to 18 above) were initiated by the Claimants' solicitors sending a "without prejudice schedule of costs" to the Appellant's representatives. Both parties negotiated on the basis of that schedule and evidently had no difficulty in doing so.
39. I accept Mr Marven's submission that when, in their letter of 23 January 2003 (paragraph 14 above) the Appellant's representatives asked the Claimants' solicitors to confirm that they would not litigate without first letting them have sight of their clients' formal bill for assessment, the Appellant's representatives were not suggesting that they needed to see that bill before finalising negotiations.
40. In my judgment the Appellant's representatives were not under an obligation to pursue their negotiations and make further offers after the date of their final offer on 26 February 2003. Both parties were aware that this was the Appellant's final offer. The Claimants' representatives relied on their own counter offer made on 27 January 2003 of £5,235 (see paragraph 15 above) and they did not make any further counter offers. The negotiations had clearly come to an end at that stage.
41. I accept Mr Marven's submission that the suggestion (accepted by the Costs Officer) that a detailed bill was needed before there could be a settlement was inherently implausible, especially in the context of the simple nature and low value of the claims themselves and the costs associated with them. The "without prejudice schedule of costs" clearly sufficed as a basis for negotiation.
42. The Claimants' bill submitted for assessment by the Costs Officer totalled £8,654.65 (£7,661 without VAT). This was (on any basis) a very large bill in a case where the damages awarded to the Claimants amounted to £3,750 and the proceedings were settled without the need to issue a claim. The Costs Officer assessed these costs at £4,776.86 (including £519.94 for items 31 and 32). That represents a very substantial reduction in the bill.
43. I accept Mr Marven's submission that when the Costs Officer made no order for the costs of the costs-only proceedings because the matter ought to have been capable of settlement, he did not have due regard to the reason for there having been no settlement, viz that the Claimants had pressed for more than he had in the event allowed. It is evident that they had pressed for a very great deal more and the fact that the bill was assessed down to some £98 less than the Appellant's final offer of £4,850 should, in my judgment, have led him to conclude that the Appellant was entitled to his costs.
44. Accordingly, I allow this appeal and propose (subject to the parties' submissions) to make an order providing:

(1) that the Claimants' bill be assessed in the sum of £4,256.92; and

(2) the Claimants do pay the Appellant's costs of the Part 8 and detailed assessment proceedings and the Appellant's costs of this appeal to be assessed if not agreed.

45. If the parties do not attend when this judgment is handed down I will appoint a date so that the parties can make submissions about the terms of the proposed order and so that directions can be given for the assessments to which I have referred. Also if the parties do not attend I will extend their time for asking for permission to appeal until that later hearing. If the parties do attend I will hear submissions about these matters then.